International Marketing

Place Component of the Global Marketing Mix

The American Marketing Association defines channel of distribution as “An organized network of agencies and institutions, which in combination, perform all the activities required to link producers with users to accomplish the marketing task.”

Distribution is the physical flow of goods through channels; as suggested by the definition, channels are comprised of a coordinated group of individuals or firms that performs functions adding utility to a product or service. The major types of channel utility are:

  • Place (the availability of a product or service in a location that is convenient to a potential customer);
  • Time (the availability of a product or service when desired by a customer);
  • Form (the product is processed, prepared and ready to use, and in proper condition); and
  • Information (answers to questions and general communication about useful product features and benefits are available).
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Abey Francis

What Pricing Policy should a Global Company Pursue?

Viewed broadly, there are three alternative positions a company can take toward worldwide pricing.

1. Extension/Ethnocentric

The first can be called an extension/ethnocentric pricing policy. This policy requires that the price of an item be the same around the world and that the importer absorbs freight and import duties. This approach has the advantage of extreme simplicity because no information on competitive or market conditions is required for implementation. The disadvantage of this approach is directly tied to its simplicity. Extension pricing does not respond to the competitive and market conditions of each national market and, therefore, does not maximize the company’s profits in each national market.… Read the rest

Abey Francis

Price Component of the Global Marketing Mix

In any country, three basic factors determine the boundaries within which market prices should be set. The first is product cost, which establishes a price floor, or minimum price. While it is certainly possible to price a product below the cost boundary, few firms can afford to do this for extended periods of time. Second, competitive prices for comparable products create a price ceiling or upper boundary. International competition almost always puts pressure on the prices of domestic companies. A widespread effect of international trade is to lower prices. Indeed, one of the major arguments favoring international business is the favorable impact of international competition upon national price levels and, in turn, upon a country’s rate of inflation.… Read the rest

Abey Francis

Product Component of the Global Marketing Mix

Product is probably the most crucial element of a marketing program. To a very important degree a company’s products define its business. Pricing, communication, and distribution policies must fit the product. Its research and development requirements will depend upon the technologies of its products. Indeed, every aspect of the enterprise is heavily influenced by the firm’s product offering.

In the past, managers have been prone to committing (often simultaneously) two types of errors regarding product decisions in global marketing. One error has been to fall victim to the “Not Invented Here” (NIH) syndrome, ignoring product decisions made by subsidiary or affiliate managers.… Read the rest

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